PROFITS IN NON‐MANUFACTURING INDUSTRIES IN THE UNITED KINGDOM 1920‐38*

AuthorP. E. Hart
DOIhttp://doi.org/10.1111/j.1467-9485.1963.tb00331.x
Publication Date01 June 1963
SCOTTISH
JOURNAL
OF
POLITICAL
ECONOMY
JUNE
1963
PROFITS IN NON-MANUFACTURING INDUSTRIES IN
THE
UNITED KINGDOM 1920-38*
P.
E.
HART
1.
INTRODUCTION
1.1 There are many reasons for wanting to compile time-series of
profits for individual industries. First, knowledge of the trend and
fluctuations of an industry’s profit over a long period is useful in its
own right as a contribution to the economic history of British indus-
tries.
A
current breakdown of profit is published by the Central
Statistical Office in the annual Blue
Book
on
National Income
and
Expenditure
[7].
The
92nd Report
of
the Commissioners
of
Her
Majesty’s Inland Revenue
[2]
contains estimates of profit in each
industry for 1936, 1937, and 1938. These estimates are being revised
by the Oxford University Institute of Statistics and it is hoped that
the Inland Revenue authorities will publish this information,
together with new estimates of profit for each industry in 1927 and
in
1932. The present paper is concerned with the period 1920-38. But
this is merely the first step; an industrial breakdown of profit could
readily be extended back to 1908 and, indeed, some suitable industrial
analysis of profits could probably be extended back to the
1880s.
A
time-series
of
profit for a particular industry over the past
80
years
would be welcomed by any economic historian interested in the
changing fortunes of this industry.
*This article is part
of
a
wider study
of
profits in all British industries
1920-38
started at the University
of
Glasgow in
1959
and then assisted by
a
grant
from
the Carnegie Trust for the Universities
of
Scotland. In addition to
thanking the Carnegie Trust,
I
should like to thank
A.
K.
Cairncross,
G.
R.
Fisher,
J.
B.
Jefferys,
K.
Maywald,
D.
J.
Robertson and
D.
G.
Tipping
for
their
helpful comments
on
earlier drafts
of
this paper.
I
also thank Miss Christine
Gibson
for
carrying out
so
efficiently the enormous number
of
computations
necessary to derive the results in Tables
1
to
VIII.
167
1
170
P.
E.
HART
attempt to formulate an ideal definition of profit would require
a
separate treatise and would be out of place in the present paper.
Fortunately, the precise definition of any economic variable is
often less important than the fact that it is consistent with
a
definition
used elsewhere. This is the case here.
A
primary aim
of
the present
research is to construct time-series 1920-38 which are comparable with
the existing estimates of profits 1948-61 made by the Central Statis-
tical Office, and it is therefore necessary to follow the
C.S.O.
definitions
and methods as far as is possible. These have been explained in
detail by the
C.S.O.
[8]
and all that is needed here is
a
brief
description, together with an indication of the extent to which they
can be followed for the period 1920-38.
The current Blue Book on National Income estimates three types of
profit
:
incomes
of
companies, of self-employed persons, and of public
corporations. An analysis of profit by orders in the Standard Industrial
classification is given for non-manufacturing industries, though the
distinction between the three different types of profit is generally not
made within each order. For manufacturing industries, the Blue Book
contains an industrial analysis of corporate profit but there is no such
analysis for other types of profit.
The
C.S.O.
compiles figures of profit from information supplied to
it by the Inland Revenue authorities, who in turn obtain their infor-
mation from the accounts submitted to them by companies and
unincorporated enterprises in connection with the assessment of their
taxation liabilities. Some
of
this basic information is published by the
Inland Revenue in its annual reports, though it must be remembered
that the published Inland Revenue figures are before the various
adjustments carried out by the
C.S.O.
and
listed in
[8].
especially
pages 152-163, and from the point of view of social accounting they
are somewhat crude. Nevertheless, these raw figures are relevant to
the extension of the existing profit series back to 1920, simply because
the estimates made from the Inland Revenue data for 1927, 1932 and
1936-38 constitute the bench-marks from which all other estimates of
profit in the period 1920-38 must be measured. Accordingly, it is
necessary
to
describe the Inland Revenue definition of profit in more
detail.
There are several Inland Revenue measures of profit, but the
figure with most economic interest is gross true trading income
assessed under Schedule
D.
The relationships between the various
Inland Revenue measures of profit are set out very clearly in each
annual report. Briefly,
'
gross income assessed
*
is the profit which
the Inland Revenue thinks a particular firm earns. After an exami-

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